Thank you to the staff of the Division of Corporation Finance and the Office of the General Counsel for all of your hard work on this rule proposal.  This was not a typical rulemaking.  To begin with, this has no pretense of furthering the SEC’s tripartite mission: protect investors; maintain fair, orderly, and efficient markets; and facilitate capital formation.  Not one of us can pretend that it does so.

Next, this is the third time this decade that the Commission has proposed Rule 13q-1 and related amendments to Form S-D.  The Commission first adopted the rules in 2012, but they were vacated by the U.S. District Court for the District of Columbia less than one year later.[1]  The Commission adopted a revised version of Rule 13q-1 and amendments to Form S-D in 2016.[2]  Less than one year later, the revised rules were disapproved by a joint resolution of Congress[3] pursuant to the Congressional Review Act.[4]  Each of these events in this rulemaking’s history placed new substantive and procedural constraints upon the staff as they approached this proposal, making their task in developing today’s recommendation particularly challenging. 

Some might interpret the failure of the SEC’s prior attempts at this rulemaking as a sign that we are not the best agency to carry it out.  That said, this is a Dodd-Frank mandate so I am always happy that the Commission takes its statutory requirements seriously.  I do hope that in the future Congress will draft legislation for the agency that directly regulates a particular activity as was not the case here.

I believe the staff did their best under these bizarre circumstances to develop the recommendation we are voting on today, and I look forward to reading the comments we receive in response to our questions.  In particular, the Commission spent a lot of time working on the definition of “not de minimis.”  The statute does not define “not de minimis” or explain how that term should be applied.  We ask the—no pun intended—threshold question in the release whether we should base the relevant threshold on an amount that is not de minimis relative to (i) a particular resource extraction issuer, (ii) a particular country, or (iii) a particular project.  We also ask if, as an alternative to setting a bright line threshold based on dollar amounts of payments, we should leave “not de minimis” undefined and allow resource extraction issuers to make the determination of what qualifies as a payment that is “not de minimis,” based on the particular facts and circumstances.  We put much consideration into this issue and I hope that commenters will be thoughtful in their responses.

Thank you again to everyone who worked on this recommendation and to the commenters who will help us improve upon it.